Two months after absorbing mandatory spending cuts, state agencies and public schools face another round of forced budget reductions today to cover a projected $120 million shortfall.

The state's top financial officers, including Gov. Mark Sanford, could decide this morning whether to order across-the-board spending cuts as high as 3 percent. On Dec. 10, the State Budget and Control Board agreed to equally cut spending by government agencies 5 percent because of slumping tax collections.

Government programs and services are at risk of further cutbacks amid disclosures South Carolina's economy - like that of the rest of the nation - is mired in quicksand.

The Board of Economic Advisors, the state's official revenue forecaster, on Monday slashed its estimate on tax collections by $120 million for the budget year ending June 30.

"We're in our fourth year of no growth basically," said William Gillespie, the state's chief economist. "And there's nothing on the horizon that says we're going to come out of this."

The scaled-down projections came after the number crunchers released figures showing January revenue was down 6.5 percent - or nearly $36 million - over the same period last year.

The January numbers include sales tax collections for the Christmas shopping season. Figures show sales tax revenue was 4 percent - or about $8 million - below that of the prior Christmas season, when the nation's economy went into a nose dive after the Sept. 11 terrorist attacks.

To meet budget requirements, tax collections needed to grow 4 percent, a threshold the state has not reached since the 1998-99 budget year.

Without much hand-wringing, the Board of Economic Advisors acted quickly to lower its revenue target with five months remaining in the budget year.

"It's not a pretty picture," said John Rainey, newly appointed chairman of the Board of Economic Advisors. "And that's why we've got to be as sure as we can be that our crystal ball is very clear and that we're making the best possible projections we can of our revenues based upon the facts we have today."

With the Board of Economic Advisors' decision, the scene shifts to the Budget and Control Board, which has the authority to levy unilateral cuts to avoid a year-end deficit. Since the economic downturn began, the five-member Budget and Control Board has ordered spending reductions to bring spending in line with dwindling revenues.

Since May 2001, temporary and permanent budget cuts have pared more than $942 million in anticipated government spending.

"Clearly, there has to be a cut (today)," said House Ways and Means Committee chairman Bobby Harrell, R-Charleston, a board member. "Any kind of cut in (today's) Budget and Control Board meeting will make these the biggest cuts that we've had in modern times."

Rainey, the Board of Economic Advisors chairman, is expected to brief Budget and Control Board members today on the state's economic woes. The board will likely weigh several factors in deciding - if at all - how much needs to be pared from state spending.

Along with the $120 million shortfall, the state has about $25 million in IOUs that have to be paid. Those IOUs include $12 million to cover the anticipated shortfall in the LIFE scholarships, a state-funded, merit-based award program.

In addition, the Palmetto Fellow scholarship program, the state's highest college scholarship program, faces a $3.9 million shortfall. The remainder of the $25 million in IOUs is needed to cover the cost of tax breaks.

The scholarship programs face budget gaps, officials say, because more students qualified than anticipated and the amount of the awards increased for both. For the LIFE scholarship, it marks the fourth consecutive year the program has faced a funding gap.

"From a state financial aid perspective, it's a great situation to be in to have an increasing number of students qualify," said Charlie FitzSimons, spokesman for the Commission on Higher Education.

Besides the IOUs, Budget and Control Board members will likely weigh the financial problems plaguing the state's prison system. Just last month, the Department of Corrections notified the board it anticipates a deficit of about $20 million this year. Last year, the agency ran a $6.1 million deficit.